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M.A.G.I.C. Or Manufacturing Apparel Garments In China
(BE VERY CAREFUL!)

  

Consultants Corner  News China  Consulting

 

 

By:  Bruce S. Berton

The question is, Quota Yes or Quota No.

I have a 50/50 chance of being right, so therefore, I say; QUOTA -- NO!

The larger corporations already doing business worldwide are consolidating their manufacturing facilities, vendors and suppliers and are moving non-China production into their preferred manufacturing facilities in China.

I have stated many times that to survive and remain profitable, you must perform the following three things: Competitive COST, QUALITY of specifications contracted, and ON-TIME DELIVERY.

Do you want your orders to be the first work in process going into a beautiful, but inexperienced factory? Though these facilities will promise all you want to hear, I guarantee you are on the road to Chargeback Hell.

In over 50 years of visiting, setting up, and running factory facilities worldwide, I have seen a lot of hard work and reputations tarnished or ruined.

RELATIONSHIPS, RELATIONSHIPS, RELATIONSHIPS will be the key to your success!  These relationships are based on two key elements:  finances and factual communications. 

Whatever terms you are doing business with (and they might change) after January 1, 2005, make sure you honor your terms of payment. This is the key to keep your place in line.

Now for the relationship part: it is not with your QC, it is with you personally, the on-site infrastructure you build and how you monitor your production.

International production cannot be monitored properly from the U.S.A. or by the factory itself. You need to have a trained
quality control infrastructure that understands your particular specification requirements.

Let's say you have worked very hard, the factory has performed, and your people have done their jobs. You have your at -site cost, you have lived up to your financial obligations, but the on-time delivery goes to the dogs because you have not put an effort into your freight forwarder or customs broker, and your documentation preparation is nonexistent.

So now you have paid for all of the general administration and for the actual goods, but you cannot ship or deliver the goods on time. Therefore, you will have to give away your gross margins and you will be in
Chargeback Hell.

Does all of this sound familiar?  Let me tell you, it is going to get a lot worse. Not because it is China, but because you have not taken a "hands on" realistic approach to your business.

To do business internationally, your "ducks have to be in a row", and even then, the currents may slow or cause unforeseen variables.

You must become your own COO, CFO, and VP of Manufacturing and Sourcing to understand the necessary requests and needs of your business team.

If you review all that it takes to process a valid purchase order from acceptance to completion, you will have a good chance for success.

I am not saying that you must do everything yourself, but that you must have the systems reporting factual information to you, so that you can make decisions that will protect your profits. I do not want to be in 2005 during the month of May and say, "I told you so."

I am not expressing gloom and doom; I am saying that you importers are PROS, but the rules of the game have changed and are still changing. My other statement is always, "There is nothing so permanent as change". I will humbly tell you that Stonefield Josephson's textile/apparel professionals have over 100 years of experience to advise you.

To all of the manufacturers at MAGIC, I wish you continued success. To the retailers, this is your opportunity to meet new vendors and bring exciting new merchandise to your customers.
 


Bruce S. Berton is a business and management consultant with Stonefield Josephson, Inc., a leading regional consulting and accounting firm with offices in Santa Monica, San Francisco, Walnut Creek and Mexico City. The information in this column is of a general nature.  Readers inquiries are welcome; and may be sent to Bruce Berton, at Stonefield Josephson, Inc., 2049 Century Park East Suite 400 Los Angeles, California 90067 310-432-7437 Direct
866-225-4511 Toll Free
310-432-7519 Fax Los Angeles
Orange County
San Francisco
East Bay Silicon Valley
Hong Kong, or send an e-mail to: 
[email protected]

 

 

   
 

 

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